David Wessel of the Wall Street Journal wrote a column several days ago entitled “Medicare Merits Reasoning, Not Rhetoric” and challenged both Presidential candidates to address the runaway spending in Medicare and other entitlements in a different way. He said, “it’s not about how much you spend, but how you spend it.”
As I was reading a summary of the Affordable Care Act prepared by the Kaiser Family Foundation, I ran across a perfect example to amplify Wessel’s point about “how you spend it?”
The CLASS Act provision of the Health Reform bill was passed into law but was flawed from the very beginning; The Democrats put it in the bill despite warnings from the Congressional Budget Office’s chief actuary and the fiscal commission led by Alan Simpson and Erskine Bowles.
Simpson and Bowles singled it out as an “unsustainable” entitlement that would most likely saddle taxpayers with a major new liability. The unfunded type.
Why was their warning not heeded? The so called CLASS Act wasone of the late Senator Ted Kennedy’s most cherished programs and he wanted it in the bill. As you recall, Senator Kennedy was not in good health and had a short life expectancy during this period. The senate approved it in a 51-47 vote even when members like former Virginia Senator, Mark Warner had stated, “the program would be upside down in a short period, and needed to be out of the bill.”
Now, that’s one example of why we are in this mess of unsustainable unfunded liabilities that former United States Comptroller General David Walker is talking about. But, not enough members of congress are listening-and that might be why Congress’s approval rating is at an all time low of 10%.
The CLASS Act (Community Living Assistance Services and Supports) Act was a voluntary long-term care disability program that would pay disabled enrollees a cash benefit. The insurance would be offered through the work place, where employers who agree to participate would sign up their employees automatically-but also give them a chance to decline coverage.
The law mandated that the CLASS program be sound and self-financing for 75 years but the Obama administration gave up trying and suspended the program. I was a critic of this program from the very beginning because the program was vulnerable to adverse risk selection-in which the only people who sign up for it are those with expensive health problems-and could not be sustained by premiums alone.
Some of these problems were intended to be worked out before theAffordable Care Act was passed but that never happened. Suspending the program was the correct call by the Obama administration. Shortly after the plan was shelved, a USA editorial stated that, “pushing ahead would have meant creating an inadequately funded health care entitlement that almost certainly would have required a federal bailout down the road, and the White House was prudent to cut its losses.”
Does this mean that all of “Obama Care” is equally flawed? I don’t believe so. There are parts of the bill like guaranteed medical insurance for all regardless of health conditions that have changed the lives of million Americans, especially those who were about to go bankrupt because of major health bills. Exhausting all of one’s assets to pay for medical care has been the leading cause of bankruptcy in America.
And, there are some parts of the bill that will provide benefits helpful to seniors like closing the doughnut hole in the Part D prescription program. But, once again, it was done without regard to paying for it. And, that’s a problem.
In my next blog, I will highlight parts of the Affordable Care Act that relate to Medicare, so you’ll at least know what parts would disappear if you advocate repealing all of Obama Care.
Coach
